Martin County, Palm Beach County, Broward County Market Overview

Florida retail has remained adaptable amid economic uncertainty and rapid changes in consumer behavior. Demand for higher cap rate shopping centers is as strong as ever in South Florida as investors seek to hedge higher interest rates and inflation. Palm Beach County is a highly liquid investment market characterized by heavy trading. The Broward County retail market is one of the largest in the country. Lastly, retail properties regularly trade in Martin County as investors are constantly engaged with the submarket.

Highlights

• Palm Beach metro rents have risen by 59.9 percent.
• Retail rents in Martin County are 28.2 percent higher than in 2012.
• Throughout the past five years, annual sales volume in Palm Beach has averaged $165 million, including a 12-month high of $380 million.
• In Broward County, there are currently 29 properties under construction, a total of 367,675 square feet.

Vacancy | Rent | Construction

Each county had similar market rent growth trends over the past few years, each of which had a spike during 2022.

Since Palm Beach County is a liquid investment market, prospective retail tenants searching for affordable space will find several options throughout the area. The West Palm Beach area has a relatively high proportion of neighborhood center space. For that slice specifically, rents run at about $24.00 per square foot in the submarket, a sizeable discount to the $31.00 per square foot average neighborhood center rent in the metro.

Vacancies in the metro trended slightly down over the past four quarters. In addition, 1.2 million square feet has been delivered to the market over the past three years (a cumulative inventory expansion of 1.5%). Currently, there are 740,000 square feet underway. Broward County has also seen significant rent growth over the past few years. The market rent per square foot for retail properties has risen to $31 and is forecasted to continue growing to about $53 per square foot by 2026 based on the most recent market trends. The submarket has also seen a steady flow of new development projects. There are currently 29 properties under construction, a total of 367, 675 square feet.

In Martin County, the retail space commands $21 per square foot triple net on average, which aligns with the Port St. Lucie metro’s average asking rent. Over the last 12 months, the county has seen a significant increase in rent rates by 5.4 percent. Vacancies for both Broward and Martin county were somewhat below the 10-year average as to end of 2022, but were essentially flat over the past four quarters.

Sales

During Q4 2022, the estimated price movement of all properties in the submarket sat at $287 per square foot. That pricing has dramatically increased from last year’s records, growing by more than 10 percent. The market cap rates have shrunk to an average of 5.9 percent, hitting a record low in the last five years.

Investors have been particularly active in Palm Beach County, making it one of the most heavily traded submarkets in the region over the past several years.

In Broward County, 574 retail deals have closed this past year alone. This is a material increase compared to the five-year average sales count. Annualized sales volume has averaged $1.0 billion over the past five years, and the volume hit $2.2 billion within the past 12 months – the highest level recorded over those five years. Market pricing currently resides at $296 per square foot, a significant improvement from 2021. Fort Lauderdale’s cap rate is also at its lowest during the past five years, at 5.9 percent.

Martin County is a popular target among Port St. Lucie metro retail investors. Over the past five years, the annual sales volume has averaged $40.3 million per year. During this time, there was a 12-month high of $84.1 million in 2022. Most sales can be attributed to the retail sector, which dramatically drove high volume. Market pricing has sat at $231 square foot throughout 2022. Martin County’s cap rates are trading at an average of 6.5 percent, this is the lowest they have been in the last five years.